EXHIBIT 10.2
[EXECUTION VERSION]
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), made, entered into and
effective as of March 1, 2005, is by and between HealthSouth Corporation, a
Delaware corporation ("Corporation"), and XXXXX X. XXXXXXXXX, an individual
resident of Indiana (the "Executive").
RECITALS
The Corporation desires to employ the Executive as an Executive Vice
President and its Chief Administrative Officer effective as of the Commencement
Date (as hereinafter defined), and the Executive desires to accept such
employment effective as of the Commencement Date, on the terms and conditions
set forth herein.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
Section 1. Employment. The Corporation hereby employs the Executive,
and the Executive hereby accepts employment, all on the terms and conditions
herein.
Section 2. Services; Extent of Services.
(a) Duties and Responsibilities. The Executive is hereby employed as
an Executive Vice President and as the Corporation's Chief Administrative
Officer, the authority, duties and responsibilities of which will be as
follows: the Executive will
(i) have the oversight responsibility of the human resources,
project management organization, corporate security, support services,
aviation and travel management functions of the Corporation;
(ii) have the oversight responsibility of the Corporation's
corporate conference center and printing / distribution center, both
of which are located at the Corporation's headquarters complex; and
(iii) have such other powers, duties and responsibilities
consistent with the Executive's positions as may be determined or
directed by the Corporation's Board of Directors and/or the Chief
Executive Officer.
The Executive will report to the Chief Executive Officer of the
Corporation and will comply with the various policies, procedures and codes of
conduct of the Corporation in effect from time to time which apply to other
employees and executive officers.
(b) Full Business Attention. The Executive will devote his full
business attention and energies to the business of the Corporation during the
Term (as defined below) (excluding any periods of vacation and sick leave to
which the Executive is entitled) and will physically report and will render all
the Executive's services contemplated hereunder to the Corporation at its
offices in Birmingham, Alabama or at any other location in which the
Corporation is headquartered; provided, however, that the foregoing requirement
to render services in Birmingham shall not apply when the Executive is
traveling on company business.
(c) Other Activities. Notwithstanding anything to the contrary
contained in Section 2(b), the Executive will be permitted to engage in the
following activities, provided that such activities do not materially interfere
or conflict with the Executive's duties and responsibilities to the
Corporation:
(i) the Executive may serve on the governing boards of, or
otherwise participate in, a reasonable number of trade associations
and charitable organizations whose purposes are not inconsistent with
the activities and the image of the Corporation;
(ii) the Executive may engage in a reasonable amount of
charitable activities and community affairs;
(iii) the Executive may manage his personal and family
investments; and
(iv) subject to the prior approval of the Nominating /
Corporate Governance Committee of the Board of Directors of the
Corporation (the Corporation's Board of Directors is hereinafter
referred to as the "Board"), the Executive may serve on the board of
directors of up to one (1) business corporations or other for-profit
entities, provided that they do not compete, directly or indirectly,
with the Corporation.
Section 3. Compensation.
(a) Base Salary. In consideration of the services provided hereunder,
the Corporation shall pay the Executive during the Term a salary of Three
Hundred Twenty-Five Thousand and No/100 Dollars ($325,000.00) per year (the
"Base Salary"). The Base Salary shall be subject to review by the Compensation
Committee of the Board (the "Compensation Committee") on an annual basis and
may, in the sole discretion of the Compensation Committee, be increased as the
result of such review (and any such increased salary shall be the "Base Salary"
hereunder). In no event shall the Base Salary be reduced during the Term. The
Corporation shall pay the Base Salary in arrears in equal installments in
accordance with the Corporation's payroll policy in effect from time to time
for other similarly-situated officers of the Corporation. The Executive's Base
Salary shall be prorated for 2005 based upon the portion of the year remaining
on the Commencement Date.
(b) Bonus. During the Term, the Executive will be entitled to receive
cash bonus payments in an amount per year targeted at 60% of the amount of the
Base Salary in accordance with the senior management bonus plan, which is
currently being developed for the year ended December 31, 2005. Such bonus for
the year ended December 31, 2005 shall be no less than $100,000.
(c) Benefits. During the Term, the Executive will be entitled to the
following benefits:
(i) Employee Benefit and Perquisite Plans. The Executive will
be entitled to participate in all employee benefit and perquisite
plans, programs and arrangements of the Corporation (including,
without limitation, medical and dental, life insurance, 401(k),
disability insurance, pension (qualified and non-qualified), ESOP,
profit-sharing, and incentive and equity compensation plans) as may be
in effect from time to time on such terms as are offered for the
general benefit of other similarly-situated officers of the
Corporation, subject to the provisions of such plans as may be in
effect from time to time.
(ii) Vacation; Sick Leave. The Executive will be entitled to
vacation and sick leave on such terms as are offered for the benefit
of other similarly-situated officers of the Corporation.
(d) Expense Reimbursement. The Corporation shall reimburse the
Executive, in accordance with the Corporation's policies, for all reasonable
business expenses incurred by the Executive in connection with the performance
of the Executive's obligations hereunder. Most relocation expenses are
classified as taxable income under applicable sections of the Internal Revenue
Code. The Corporation will "gross-up" reimbursements for relocation expenses,
to the extent the Corporation determines that the Executive is subject to
federal, state or local tax on all or any portion of such reimbursement, in an
amount equal to the amount of federal, state and local taxes that the Executive
is required to pay with respect to such reimbursement.
(e) Taxes. All payments made by the Corporation under this Agreement
will be subject to withholding of such amounts as is required pursuant to any
applicable law or regulation.
(f) Equity Incentives. The Corporation agrees to provide the Executive
with equity incentives commensurate with the incentives provided to
similarly-situated officers of the Corporation, upon terms no less favorable
than those applicable to such similarly-situated officers. The Corporation
agrees that under the Corporation's existing equity incentive program the
Executive is targeted to receive an annual grant of 30,000 shares of restricted
stock and an annual option to purchase 65,000 shares of the Corporation's
common stock, par value $0.01.
(g) Relocation Expenses. The Corporation shall reimburse the Executive
for the following expenses (to the extent they are reasonable and appropriately
documented in accordance with the Corporation's relocation reimbursement
policies) incurred by the Executive in connection with such relocation:
(i) two house hunting trips for the Executive and his spouse
for the purpose of searching for a new primary residence;
(ii) temporary living and weekly commuting expenses (e.g.,
for either Executive to return to his current home or for his spouse
to travel to the Birmingham, Alabama metropolitan area) for a period
of six (6) months from the Commencement Date;
(iii) transportation of household goods and vehicles to a new
primary residence;
(iv) storage of household goods for a period of six (6)
months from the Commencement Date;
(v) closing costs, including legal fees, incurred in
connection with the purchase of the primary residence in Birmingham,
Alabama or surrounding communities; and
(vi) closing costs, including real estate agency commissions
relating to the sale of the Executive's primary residence in Indiana.
(h) Special Equity Award. Effective as of the Commencement Date, the
Corporation shall grant the Executive
(i) 30,000 shares of restricted stock (the "Restricted
Stock") pursuant to the Corporation's 1998 Restricted Stock Plan.
Except as otherwise expressly provided herein, (A) the Restricted
Stock award shall vest and cease to be restricted only if the
Executive is employed by the Corporation on the third anniversary of
the Commencement Date and (B) the Executive will immediately forfeit
the Restricted Stock if he ceases to be employed by the Corporation
prior to the third anniversary of the Commencement Date; and
(ii) a stock option (the "Option") to purchase an aggregate
of 65,000 shares of the Corporation's common stock, par value $0.01
(the "Shares"), pursuant to the Corporation's 1995 Stock Option Plan.
The Option shall have a term of ten (10) years from the date of grant,
subject to earlier expiration as provided herein. The per Share
exercise price of the Shares underlying the Option shall be equal to
the last reported sales price for a Share on the Commencement Date (or
the immediately preceding trading day if the Commencement Date is not
a trading day) as quoted by brokers and dealers trading in the Shares
in the over-the-counter market. Except as otherwise expressly provided
herein, the Option shall vest and become exercisable with respect to
one-third of the Shares on each of the first three anniversaries of
the Commencement Date (i.e., 21,666 Shares vest on the first
anniversary, 21,666 Shares vest on the second anniversary and 21,667
Shares vest on the third anniversary) provided the Executive is
employed by the Corporation on each such date.
Except as otherwise provided herein, the Restricted Stock award and Option
shall be governed by the terms of the equity incentive plan(s) and/or
agreements pursuant to which the Restricted Stock award and Option are granted.
Section 4. Term. The term of this Agreement will commence on March 1,
2005 (the "Commencement Date") and will continue for a term of three (3) years
following the Commencement Date (the "Term"), unless earlier terminated
pursuant to the provisions of Section 5 below.
Section 5. Termination of Employment.
(a) Termination by Corporation for Cause. The Executive's employment
by the Corporation will terminate immediately upon written notice to the
Executive if the Corporation elects to discharge the Executive for Cause (as
hereinafter defined). For purposes hereof, "Cause" means:
(i) the Corporation's procurement of evidence of the
Executive's act of fraud, misappropriation, or embezzlement with
respect to the Corporation;
(ii) the Executive's indictment for, conviction of, or plea
of guilt or no contest to, any felony (other than a minor traffic
violation);
(iii) the suspension or debarment of the Executive or of the
Corporation or any of its affiliated companies or entities as a direct
result of any willful or grossly negligent act or omission of the
Executive in connection with his employment with the Corporation from
participation in any Federal or state health care program;
(iv) the Executive's admission of liability of, or finding by
a court or the Securities Exchange Commission (or a similar agency of
any applicable state) of liability for, the violation of any
"Securities Laws" (as hereinafter defined) (excluding any technical
violations of the Securities Laws which are not criminal in nature).
As used herein, the term "Securities Laws" means any Federal or state
law, rule or regulation governing the issuance or exchange of
securities, including without limitation the Securities Act of 1933,
the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder;
(v) a formal indication from any agency or instrumentality of
any state or the United States of America, including but not limited
to the United States Department of Justice, the United Securities and
Exchange Commission or any committee of the United States Congress
that the Executive is a target or the subject of any investigation or
proceeding into the actions or inactions of the Executive
(collectively, the "Investigations) for a violation of any Securities
Laws in connection with his employment by the Corporation (excluding
any technical violations of the Securities Laws which are not criminal
in nature);
(vi) the Executive's failure after reasonable prior written
notice from the Corporation to comply with any valid and legal
directive of the Chief Executive Officer or the Board that is not
remedied within thirty (30) days of the Executive being provided
written notice thereof from the Corporation; or
(vii) Other than as provided in Sections 5(a)(i) - (vi)
above, the Executive's material breach of any material provision of
this Agreement that is not remedied within thirty (30) days of the
Executive being provided written notice thereof from the Corporation.
Repeated breaches of a similar nature, such as the failure to report to work,
perform duties, or follow directions, all as provided herein, shall not require
additional notices as provided Section 5(a)(vi) or (vii).
(b) Termination by Corporation Without Cause. The Corporation may
terminate this Agreement Without Cause upon at least thirty (30) days' prior
written notice to the Executive. Any termination of this Agreement by the
Corporation for a reason other than for Cause shall be considered a termination
Without Cause.
(c) Death or Disability. The Executive's employment by the Corporation
will immediately terminate upon the Executive's death and, at the option of
either the Executive or the Corporation, exercisable upon written notice to the
other party, may terminate upon the Executive's Disability (as hereinafter
defined). For purposes of this Agreement, "Disability" will occur if (i) the
Executive becomes eligible for full benefits under a long-term disability
policy provided by the Corporation, if any, or (ii) the Executive has been
unable, due to physical or mental illness or incapacity, to substantially
perform the essential duties of his employment with reasonable accommodation
for a continuous period of ninety (90) days or an aggregate of one-hundred
eighty (180) days during any consecutive twelve (12) month period.
(d) Termination by the Executive for Good Reason. The Executive may
terminate this Agreement at any time upon thirty (30) days' prior written
notice to the Corporation and the Corporation fails to cure such event within
such thirty-day period (any such termination referenced in clauses (i)-(iii)
below, constituting termination for "Good Reason"):
(i) if the Corporation fails to make all or any portion of
any payment, or offer all or any portion any benefits, as provided in
Section 3 hereof when such payments or benefits are due;
(ii) if the Corporation materially modifies the senior
management bonus plan or equity incentive plan such that the targeted
cash bonus levels and targeted incentive compensation levels
applicable to the Executive are materially lower than those levels of
other similarly-situated executive officers of the Corporation;
(iii) except as otherwise set forth in clauses (i) or (ii)
above, if the Corporation materially breaches any of its other duties,
obligations or agreements hereunder (including, without limitation, a
material diminution in the Executive's duties, authority or
responsibilities).
(e) Termination by the Executive without Good Reason. The Executive
may terminate this Agreement without Good Reason upon at least thirty (30)
days' prior written notice to the Corporation.
(f) Change in Control. The Executive may terminate this Agreement
within sixty (60) days following a "Change in Control" (as hereinafter
defined). For purposes of this Agreement, a "Change in Control" will be deemed
to have taken place if, whether in a single transaction or a series of
transactions:
(i) any person or entity, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
other than the Corporation, or any employee benefit plan of the
Corporation or any of its subsidiaries, becomes the beneficial owner,
directly or indirectly, of the Corporation's securities having fifty
percent (50%) or more of the combined voting power of the then
outstanding securities of the Corporation that may be cast for the
election of directors of the Corporation or otherwise has the ability
to elect the directors of the Corporation (other than as a result of
the issuance of securities initiated by the Corporation in the
ordinary course of business);
(ii) as the result of, or in connection with, any cash tender
or exchange offer, merger or other business combination, or any
combination of the foregoing transactions, the holders of all the
Corporation's securities entitled to vote generally in the election of
directors of the Corporation immediately prior to such transaction
constitute, following such transaction, less than a majority of the
combined voting power of the then-outstanding securities of the
surviving entity (or in the event each entity survives, the surviving
entity that is the parent entity) entitled to vote generally in the
election of the directors of such surviving entity (or in the event
each entity survives, the surviving entity that is the parent entity)
after such transactions; or
(iii) the Corporation sells, transfers or leases all or
substantially all of the assets or business or of the Corporation and
its subsidiaries, collectively.
Notwithstanding the foregoing, the occurrence of any of the following events,
by themselves, will not be deemed to constitute a "Change in Control": (x) if,
pursuant to or within the meaning of the United States Bankruptcy Code or any
other Federal or state law relating to insolvency or relief of debtors, the
Corporation (A) commences a voluntary case or proceeding (and the Change of
Control takes place pursuant to such proceeding); or (B) consents to the entry
of an order for relief against it in an involuntary case (and the Change of
Control takes place pursuant to such proceeding); or (y) if any of the events
or transactions otherwise constituting a Change of Control under this Section
5(f) shall not involve, at the time or within a sixty (60) day period
thereafter, a substantial diminishment in the Executive's duties, authority or
responsibilities as Chief Administrative Officer so that they are no longer
consistent with the position of Chief Administrative Officer of a public
corporation.
Section 6. Effect of Termination.
(a) Termination by the Corporation for Cause; Termination by the
Executive Without Good Reason. Upon termination of this Agreement (i) by the
Corporation for Cause pursuant to Section 5(a) above, or (ii) by the Executive
Without Good Reason pursuant to Section 5(e) above, the Executive will be
entitled to receive (i) Base Salary and bonus payments, payments in respect of
accrued but unpaid vacation and reimbursement for business expenses, in each
case due, accrued or payable as of the date of such termination, (ii) payment
of other amounts, entitlements or benefits in accordance with the applicable
plans, programs and arrangements of the Corporation until such termination, and
(iii) such vested stock options and other benefits as the Executive may be
entitled to receive under any stock option or other employee benefit plan, but
will not be entitled to receive the Severance Payment (as defined in Section
6(c) below).
(b) Other Termination. Upon termination of this Agreement (i) by the
Corporation Without Cause pursuant to Section 5(b) above (including termination
Without Cause following a Change in Control), (ii) by the Executive within
sixty (60) days following a Change in Control pursuant to Section 5(f) above,
(iii) by the Corporation or the Executive as the result of the death or
Disability of the Executive pursuant to Section 5(c) above, or (iv) by the
Executive for Good Reason pursuant to Section 5(d) above, the Executive will be
entitled to receive (1) Base Salary and any outstanding bonus payments,
payments in respect of accrued but unpaid vacation and reimbursement for
business expenses, in each case due, accrued or payable as of the date of such
termination, (2) payment of other amounts, entitlements or benefits in
accordance with the applicable plans, programs and arrangements of the
Corporation, (3) such vested stock options (whether vested by acceleration or
time-vesting) and other benefits as Executive may be entitled to receive under
any equity incentive plan or any other stock option or other employee benefit
plan, (4) relocation expenses substantially identical to those described in
Section 3(g) above related to a relocation from Birmingham, Alabama to another
location in the continental United States of America, (5) the Severance Payment
(as determined pursuant to Section 6(c) below), which Severance Payment will be
payable in accordance with the Corporation's payroll practices and (6) all
shares of Restricted Stock granted to the Executive pursuant to this Agreement,
with such shares of Restricted Stock being free of any and all restrictions
other than those required by the Securities Laws to be imposed by the
Corporation on such shares of Restricted Stock.
(c) Severance Payment. For purposes of this Agreement, "Severance
Payment" means:
(i) in the event of any termination by the Corporation
Without Cause pursuant to Section 5(b) above (including termination
Without Cause following a Change in Control), for a period equal to
then-remaining Term (without regard to its earlier termination) but in
no event less than twenty-four (24) months following the date of
termination, an amount equal to the sum of (A) the Executive's Base
Salary and (B) the cost of maintaining the medical, dental and life
insurance coverages and all pension and welfare benefit plans and
programs in which the Executive and his eligible dependents were
participating immediately prior to the date of termination of his
employment relationship with the Corporation (the "Cost of Health
Benefits");
(ii) in the event of any termination by the Executive for
Good Reason pursuant to Section 5(d), or in the event of a termination
by Executive within sixty (60) days following a Change in Control, for
a period equal to then-remaining Term (without regard to its earlier
termination) but in no event less than twenty-four (24) months
following the date of termination, an amount equal to the sum of (A)
the Executive's Base Salary and (B) the Cost of Health Benefits;
(iii) in the event of any termination by the Corporation or
the Executive as the result of the death of the Executive pursuant to
Section 5(c) above, an amount equal to the Executive's Base Salary for
a period equal to three (3) full months plus payment for a period of
twelve (12) months following the date of termination of an amount
equal to the cost of maintaining for the Executive's dependents the
medical, dental and life insurance coverages and all pension and
welfare benefit plans and programs in which his eligible dependents
were participating immediately prior to the date of termination of his
employment relationship with the Corporation; and
(iv) in the event of any termination by the Corporation or
the Executive as the result of the Disability of the Executive
pursuant to Section 5(c) above, an amount equal to the Executive's
Base Salary for the period beginning on the termination date and
ending on the earlier of (A) the date the Executive becomes eligible
to receive Disability benefits under the Corporation's long-term
disability benefit policy and (B) the termination date of this
Agreement, plus payment for a period of twelve (12) months following
the date of termination of an amount equal to the cost of maintaining
for the Executive and the Executive's dependents the medical, dental
and life insurance coverages and all pension and welfare benefit plans
and programs in which the Executive and his eligible dependents were
participating immediately prior to the date of termination of his
employment relationship with the Corporation.
Notwithstanding any provision of this Agreement to the contrary, the Severance
Payment is subject to forfeiture for material violations of Sections 8 or 9 of
this Agreement. The amount of Severance Payment to be forfeited shall be
prorated based upon the date of the violation.
(d) No Mitigation or Offset. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the provisions
of this Agreement, and such amounts shall not be reduced whether or not the
Executive obtains other employment.
Section 7. Miscellaneous.
(a) Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (i) delivered by hand, (ii) sent by facsimile with confirmation of
transmission by the transmitting equipment, (iii) received by the addressee, if
sent by certified mail, return receipt requested, or (iv) received by the
addressee, if sent by a nationally recognized overnight delivery service, in
each case to the appropriate addresses, or facsimile numbers set forth below
(or to such other addresses, or facsimile numbers as a party may designate by
notice to the other parties):
the Executive: At the most recent address and fax
number on file at the Corporation.
with a copy to: Xxxxx X. Xxxxxxxxx
00000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Fax: ( ____ ) ____-_______
the Corporation: HealthSouth Corporation
0 XxxxxxXxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
with a copy to: HealthSouth Corporation
0 XxxxxxXxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
(b) Power and Authority. Each party warrants and represents that it
has full power and authority to enter into and perform this Agreement, and the
person signing this Agreement on behalf of such party has been properly
authorized and empowered to enter into this Agreement.
(c) Remedies. The rights and remedies of the parties to this Agreement
are cumulative and not alternative.
(d) Waiver. No failure to exercise, and no delay in exercising, on the
part of either party, any privilege, any power or any right hereunder will
operate as a waiver thereof, nor will any single or partial exercise of any
privilege, right or power hereunder preclude further exercise of any other
privilege, right or power hereunder.
(e) Entire Agreement and Modification. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements, whether written or oral, between
the parties with respect to its subject matter and constitutes a complete and
exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement signed by the party to be charged with the amendment. In the
event of any inconsistency between this Agreement and any other agreement,
plan, program, policy or practice (collectively, "Other Provision") of the
Corporation, the terms of this Agreement shall control unless such Other
Provision provides otherwise by a specific reference to this Section 7(e).
(f) Assignment. This Agreement may not be assigned by any party hereto
without the prior written consent of the non-assigning party; provided,
however, that the Corporation may assign this Agreement without the consent of
the Executive in connection with any transaction which constitutes a Change of
Control. Subject to the foregoing, this Agreement will be binding upon and
shall inure to the benefit of (i) in the case of the Executive, his heirs,
executors, administrators and legal representatives, and (ii) in the case of
the Corporation, its successors and assigns.
(g) Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions
of this Agreement will remain in full force and effect. The parties further
agree that if any provision contained herein is, to any extent, held invalid or
unenforceable in any respect under the laws governing this Agreement, they
shall take any actions necessary to render the remaining provisions of this
Agreement valid and enforceable to the fullest extent permitted by law and, to
the extent necessary, shall amend or otherwise modify this Agreement to replace
any provision contained herein that is held invalid or unenforceable with a
valid and enforceable provision giving effect to the intent of the parties.
(h) Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Agreement unless otherwise
specified. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms. The
language used in the Agreement will be construed, in all cases, according to
its fair meaning, and not for or against any party hereto. The parties
acknowledge that each party has reviewed this Agreement and that rules of
construction to the effect that any ambiguities are to be resolved against the
drafting party will not be available in the interpretation of this Agreement.
(i) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Alabama, without regard to the
conflict of law provisions thereof.
(j) Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement. A facsimile copy of a counterpart signature page
shall be deemed an original for all purposes.
(k) Attorneys' Fees; Arbitration. The parties agree that in the event
it becomes necessary to seek judicial remedies for the breach or threatened
breach of this Agreement, each party shall bear its own costs and expenses
relating to such action or suit. Except as set forth in Section 8(c) or 9(f) of
this Agreement, any controversy or claim arising out of or related to (A) this
Agreement, (B) the breach thereof, (C) the Executive's employment with the
Corporation or the termination of such employment, or (D) Employment
Discrimination, shall be settled by arbitration in Birmingham, Alabama before a
single arbitrator administered by the American Arbitration Association ("AAA")
under its Commercial Arbitration Rules and, to the extent not inconsistent
therewith, National Rules for the Resolution of Employment Disputes, effective
as of January 1, 2004 (the "Employment Rules"), and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Notwithstanding the foregoing, Rule R-34 of the AAA's Commercial
Arbitration Rules amended and restated as of July 1, 2003 (instead of Rule 27
of the Employment Rules) shall apply to interim measures. References herein to
any arbitration rule(s) shall be construed as referring to such rule(s) as
amended or renumbered from time to time and to any successor rules. References
to the AAA include any successor organization. "Employment Discrimination"
means any discrimination against or harassment of the Executive in connection
with the Executive's employment with the Corporation or the termination of such
employment, including any discrimination or harassment prohibited under
federal, state or local statute or other applicable law, including the Age
Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964,
the Employee Retirement Income Security Act of 1974, the Americans with
Disability Act, the Family and Medical Leave Act, the Fair Labor Standards Act,
or any similar federal, state or local statute.
(l) Further Assurances. Each party hereto shall perform such further
acts and execute and deliver such further documents as may be reasonably
necessary to carry out the provisions of this Agreement.
(m) No Third Party Beneficiary. This Agreement shall not confer any
rights or remedies upon any person or entity other than the parties hereto and
their respective successors and assigns.
(n) Indemnification. The Executive shall be entitled to
indemnification in connection with a litigation or proceeding arising out of
the Executive's acting as Executive Vice President and Chief Administrative
Officer or an employee, officer or director of the Corporation, to the fullest
extent permitted under the Corporation's chart and by-laws and by applicable
law. In addition, the Executive shall be entitled to liability coverage
pursuant to the Corporation-purchased directors' and officers' liability
insurance policy on the same basis as other directors and officers of the
Corporation.
(o) Survival. Provisions of this Agreement shall survive the
termination of the Executive's employment to the extent provided herein.
Section 8. Non-Competition.
(a) The Executive acknowledges and recognizes the highly-competitive
nature of the business conducted by the Corporation and its subsidiaries and
affiliates and accordingly agrees that, in consideration of this Agreement and
the premises contained herein, he shall not, for his own benefit or for the
benefit of any other person or entity other than the Corporation, during the
period commencing on the Commencement Date hereof and terminating on the first
anniversary of the expiration or termination of the Term hereof for any reason
whatsoever:
(i) actively engage in contacting, soliciting or servicing
any person or entity that was a customer or prospective customer of
the Corporation or any of its subsidiaries or affiliates at any time
during the Term hereof for the purpose of selling goods or services
which compete with the goods and services marketed or provided by the
Corporation (a customer being a patient, physician or physicians'
group with whom the Corporation does business within twelve (12)
months prior to the termination of the Term, and a prospective
customer being a patient, physician or physicians' group to which the
Corporation had made a written financial proposal within twelve (12)
months prior to the time of the termination of the Term); or
(ii) hire, retain or engage as a director, officer, employee,
consultant, agent or in any other capacity any person or persons who
are employed by the Corporation or who were at any time (within a
period of six (6) months immediately prior to the date of the
termination of the Term) employed by the Corporation or otherwise
interfere with the relationship between such persons and the
Corporation.
(b) The Executive understands that the foregoing restrictions may
limit his ability to earn a similar amount of money in a business similar to
the business of the Corporation or its subsidiaries or affiliates, but he
nevertheless believes that he has received and will receive sufficient
consideration and other benefits as an employee of the Corporation and as
otherwise provided hereunder to clearly justify such restrictions which, in any
event (given his education, skills and ability), the Executive does not believe
would prevent his from earning a living.
(c) It is agreed that the Executive's services hereunder are special,
unique, unusual and extraordinary giving them peculiar value, the loss of which
cannot be reasonably or adequately compensated for by damages, and in the event
of the Executive's breach of this Section, the Corporation shall be entitled to
seek equitable relief by way of injunction or otherwise. If the period of time
or area herein specified should be adjudged unreasonable in any court
proceeding, then the period of time shall be reduced by such number of months
or the area shall be reduced by elimination of such portion thereof as deemed
unreasonable, so that this covenant may be enforced during such period of time
and in such areas as is adjudged to be reasonable.
Section 9. Confidential Information.
(a) The Executive acknowledges that during the Term he will have
access to and may obtain, develop, or learn of Confidential Information (as
defined below).
(b) The Executive agrees that he shall hold such Confidential
Information in strictest confidence and that the Executive shall not at any
time, during or at any time during the twenty-four (24) month period following
the end of the Term, in any manner, either directly or indirectly, use (for his
own benefit or otherwise), divulge, disclose or communicate to any unauthorized
person or entity in any manner whatsoever any Confidential Information.
(c) Under this Agreement, the term "Confidential Information" shall
include, but not be limited to, any of the following information relating to
the Corporation or its affiliates learned by the Executive during the Term or
as a result of his employment with the Corporation:
(i) information regarding the Corporation's business
proposals, manner of the Corporation's operations, and methods of
selling or pricing any products or services;
(ii) the identity of persons or entities (including
physicians and vendors) actually conducting or considering conducting
business with the Corporation, and any information in any form
relating to such persons or entities and their relationship or
dealings with the Corporation or its affiliates;
(iii) any trade secret (as defined by Alabama law) or
confidential information of or concerning any business operation or
business relationship;
(iv) computer databases, software programs and information
relating to the nature of the hardware or software and how said
hardware or software are used in combination or alone; and
(v) any other trade secret or information of a confidential
or proprietary nature.
(d) During the Term, the Executive shall use, divulge, disclose or
communicate Confidential Information only in the scope of his employment with
the Corporation and only as expressly directed or permitted by the Corporation.
The Executive shall not, at any time during the twenty-four (24) month period
following the expiration or termination of this Agreement for any reason
whatsoever, use, divulge, disclose or communicate for any purpose any
Confidential Information. The Executive shall not make or use any notes or
memoranda relating to any Confidential Information except for the benefit of
the Corporation, and will, at the Corporation's request, return each original
and every copy of any and all notes, memoranda, correspondence, diagrams or
other records, in written or other form, that he may at any time have within
his possession or control that contain any Confidential Information.
(e) Except as provided for herein below, the Executive agrees that he
will treat the terms of this Agreement as confidential, and shall not directly
or indirectly disclose them in any manner except: (i) as mutually agreed upon
in writing by the parties to this Agreement; (ii) in legal documents filed with
the court or any arbitrator in any action to enforce the terms of this
Agreement; (iii) pursuant to a valid order or regulation; (iv) as otherwise
required by law or regulation; or (v) to his attorney, financial advisors,
accountant, and/or spouse, provided that prior to any such disclosure, that
individual must agree to treat as confidential all information disclosed.
(f) It is agreed that in the event of the Executive's breach of this
Section, the Corporation shall be entitled to seek equitable relief by way of
injunction or otherwise.
(g) Notwithstanding the foregoing, Confidential Information shall not
include information which has come within the public domain through no fault of
or action by the Executive or which has become rightfully available to the
Executive on a non-confidential basis from any third party, the disclosure of
which to the Executive does not violate any contractual or legal obligation
such third party has to the Corporation or its affiliates with respect to such
Confidential Information.
Section 10. Proprietary Developments.
(a) Any and all inventions, products, discoveries, improvements,
processes, methods, computer software programs, models, techniques, or formulae
(collectively, hereinafter referred to as "Developments"), made, developed, or
created by the Executive (alone or in conjunction with others, during regular
work hours or otherwise) during the Term, which may be directly or indirectly
useful in, or relate to, the business conducted or to be conducted by the
Corporation will be promptly disclosed by the Executive to the Corporation and
shall be the Corporation's exclusive property. The term "Developments" shall
not be deemed to include inventions, products, discoveries, improvements,
processes, methods, computer software programs, models, techniques, or formulae
which were in the possession of the Executive prior to the Term. The Executive
hereby transfers and assigns to the Corporation all proprietary rights which
the Executive may have or acquire in any Developments and the Executive waives
any other special right which the Executive may have or accrue therein. The
Executive agrees to execute any documents and to take any actions that may be
required, in the reasonable determination of the Corporation's counsel, to
effect and confirm such assignment, transfer and waiver.
(b) The Executive will execute any documents necessary or advisable,
in the reasonable determination of the Corporation's counsel, to direct the
issuance of patents, trademarks, or copyrights to the Corporation with respect
to such Developments as are to be the Corporation's exclusive property or to
vest in the Corporation title to such Developments; provided, however, that the
expense of securing any patent, trademark or copyright shall be borne by the
Corporation.
(c) The parties agree that Developments shall constitute Confidential
Information.
Section 11. Background Check. Notwithstanding any provisions to
contrary contained herein, the Corporation may terminate this Agreement
immediately upon written notice to Executive without penalty or fee if the
results of Executive's drug screening procedure and criminal background
investigation are unacceptable to the Corporation in its sole discretion.
Without limiting the generality of the foregoing, in the event of termination
by the Corporation pursuant to this Section, Executive shall not be entitled to
any Severance Payment.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE(S)]
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement
to be executed by themselves or by their duly authorized representatives as of
the day and date first written above.
THE CORPORATION:
HEALTHSOUTH CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Its: Executive Vice President,
General Counsel and Secretary
THE EXECUTIVE:
/s/ Xxxxx X. Xxxxxxxxx
-----------------------------------
XXXXX X. XXXXXXXXX
